Last week, the Centers for Medicare & Medicaid Services (“CMS”) released its 2018 Notice of Benefit and Payment setting out payment parameters for the Health Insurance Marketplace for upcoming years. With several insurers withdrawing from the Marketplace and others still threatening their departure, CMS is releasing this proposed Notice nearly two months early with significant proposals seeking to strengthen the program.

At the core of CMS’s proposals to strengthen the Marketplace are updates to the HHS risk adjustment model and methodology. Specifically, CMS is proposing: (1) an adjustment for members who are only enrolled for part of the year; (2) the inclusion of select prescription drug utilization data in the risk adjustment model; and (3) modifications to establish transfers for costs associated with high-cost enrollees so a portion of the costs exceeding $2 million for an individual would be shared among all issuers. Continue Reading 2018 Notice of Benefits and Payment: Proposed Updates to the HHS Risk Adjustment Model

Last month, the U.S. Government Accountability Office (GAO) released a report in which it found that manufacturer drug coupon programs for privately insured patients could potentially cause the Medicare Part B program to overspend on certain high-cost Part B drugs. The pricing for most drugs reimbursed by the Medicare Part B program is based on each drug’s average sales price (ASP), which is defined as the amount that physicians and other purchasers pay manufacturers for the drug. Currently, the ASP does not take into account drug coupons offered to privately insured patients. Continue Reading GAO Report Suggests Discount Coupons Impact Medicare Spending for Part B Drugs

Last week, the OIG issued a favorable opinion to a hospice provider seeking to make supplemental payments to skilled nursing facilities. Under the proposed arrangement, the hospice provider would make a supplemental payment to the nursing facility for dual-eligible individuals electing the hospice benefit that would be in addition to and separate from what the managed care organization (“MCO”) pays the nursing facility.

This supplemental payment by the hospice provider is different than the traditional payments that hospice providers make to nursing facilities for dual-eligible individuals. Traditionally, when a dual-eligible individual residing in a nursing facility elects the hospice benefit, Medicare pays the hospice provider a per diem rate that does not include room and board. Medicaid is responsible for paying the individual’s room and board. Medicaid pays room and board to the hospice provider and the hospice provider pays the nursing facility the negotiated rate. In a 1998 Special Fraud Alert on nursing home arrangements with hospices, the OIG specifically stated that this payment arrangement, in which the hospice provider pays the nursing facility only after receiving payment from Medicaid, is acceptable. Continue Reading OIG Gives Green Light to Hospice Provider’s Payment to Nursing Facilities

Last month, Jonathan Woodson, M.D., the Assistant Secretary of Defense for Health Affairs for the U.S. Department of Defense, issued a memorandum that effectively changes the Military Health System (“MHS”) policy on telemedicine. The new policy enables the MHS to treat patients via telemedicine when the patients are located in their homes or other locations “deemed appropriate by the treating provider.” Previously, similar to the originating site restrictions found in the current Medicare reimbursement laws, MHS providers could only treat patients via telemedicine if the patients were physically present at a military treatment facility or other designated facility, which did not include the patient’s home.

The memorandum notes that one of MHS’s major focus areas over the past year has been promoting additional options for accessing care. And the Assistant Secretary has been an outspoken advocate for expanding telemedicine services in the MHS. For example, during the keynote speech at the American Telemedicine Association’s 2014 conference, he noted that as care standards continue to evolve, it’s imperative that the MHS embrace telehealth. Continue Reading U.S. Department of Defense Expands Telemedicine Access for Military Members

The 2017 Call Letter proposes a variety of updates to the program, many that are designed to improve the accuracy of payments to plans serving beneficiaries dually eligible for Medicare and Medicaid (“dual eligibles”). Of note, CMS proposes updates to the risk adjustment model used to calculate payments to MA plans and to the Star Rating system used to evaluate plan performance. CMS stated that these proposed changes reflect the public comments received when it shared research findings on the accuracy of the CMS-HCC model for paying dual eligible beneficiaries and the impact of socioeconomic factors on the Star Ratings and solicited input. A few of the interesting 2017 proposals include: Continue Reading CMS Releases 2017 Advance Notice and Draft Call Letter

For too long, health industry stakeholders have bandied about massive amounts of information that could not be used in a comparative sense. Both public and private payers had their own proprietary reporting metrics, providers banged their heads against the wall chasing all those different metrics, and consumers had no actionable information, leaving them to seek care from providers they “like.”

The Collaborative recognized a need for information about health care quality that could be used to inform the decisions of consumers, employers, physicians and other clinicians, and policymakers. With this agreement, there is a real opportunity for all stakeholders to have truly comparable information. The new core measure sets focus on the following areas:

As we start a new year, let’s take a look back at a few hot topics that emerged in the managed care industry in 2015 and will likely be drivers of developments in 2016.

Industry Consolidation – The Changing Landscape

2015 was a year of significant activity for MCOs large and small. In addition to proposed mergers among some of the largest payors, smaller MCOs are also consolidating with other MCOs, as well as service providers, in an attempt to leverage purchasing power and integrate care models. As we discussed in our Pharmacy Industry year in review, consolidation reshaped the traditional PBM industry paradigms with a move away from stand-alone PBMs to MCO and provider-affiliated PBMs.

Competition Scrutiny

Moving into 2016, we will learn whether the proposed consolidations will be approved and whether the trend will continue. The government will also generally continue to scrutinize health care competition, paying close attention to the proposed mergers among Aetna/Humana and Anthem/Cigna. In early 2015, our colleagues highlighted the FTC-DOJ workshop examining health care competition where the agencies’ worked together to identify and examine the potential competitive implications of strategies currently used by providers and payors seeking to reduce costs and improve quality.

This week’s ML StrategiesHealth Care Update highlights the recent Department of Health and Human Services (HHS) forum on prescription drug costs, which featured players from every corner of the industry, including top government officials.

HHS Secretary Burwell kicked off the event by calling for greater support for prescription drug innovation, access, and affordability. ML Strategies reports that there seemed to be agreement that payments based on the value of care delivered should be increased across health care delivery. But, what value is, and how it should be defined, is still up for debate.

Transparency and increased competition are key issues brought up throughout the forum. Some stakeholders argued that increased transparency can already be seen by the level of scrutiny some have faced this year from drug price increases. While others contended that increased competition is what is needed.

In June, an antitrust suit brought by plaintiff ambulatory surgery centers (“ASCs”) against a health system, health insurers, and a trade association survived a motion to dismiss. Last week, the ASCs’ case cleared the hump of summary judgment and will now proceed to trial. Kissing Camels Surgery Center LLC et al. v. Centura Health Corp. et al., 1:12-cv-03012 (D.Col. August 28, 2015). The district court found sufficient evidence of a conspiracy to reduce competition for ambulatory surgery services, making summary judgment inappropriate. The attached antitrust alert, Kissing Camels Antitrust Suit Against Health System Moves Past Another Hump in the Road, provides some background on the case and considers the District Court’s ruling against summary judgment, based on its finding that there was sufficient evidence of a conspiracy to reduce competition.

Associate Editors

Mintz Levin’s Health Law Practice

As the health care and life sciences industries continue to undergo sweeping regulatory change, your company might be facing unprecedented structural and operational challenges. Heightened government scrutiny of industry practices certainly adds to the complexity of operating in the market for all providers, payors, manufacturers, distributors, and suppliers.Read More